Large Group Self-Funded Plans to Comply with Maximum Out-of-Pocket Rules Under Health Care Reform

The Department of Health & Human Services released another 149 pages of guidance concerning the Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation yesterday. While primarily concerning qualified health plans (QHP) offered through the exchanges for small groups and individuals, the preamble to the guidance also commented on applicability of the out-of-pocket limitation to large group and self-funded health plans.

HHS has clarified that they believe, and will issue future guidance to the effect, that while large group insured and self-insured plans would not have to adhere to the specified deductible limits that apply to the small group and individual coverage plans, they will have to conform to the maximum out-of-pocket requirements. This provision is found under 1302(C)(1) of the Affordable Care Act.

The out-of-pocket maximum limits are the same ones required of Qualified High Deductible Health Plans (QHDHP) that permit HSA eligibility. The 2014 limits are not known at this time, but the 2013 out-of-pocket limits for QHDHP’s are $6,250 Self-Only and $12,500 Family coverage. These amounts are indexed for inflation and are typically announced well in advance of the coming year.

Also in the release, they have issued the Actuarial Value (AV) and Minimum Value (MV) calculators. The 2014 Employer Mandate requires that plans are affordable and provide Minimum Value, covering at least 60% of the expected benefits provided by a plan.

The calculators are macro embedded Excel spreadsheets designed to accept user input of plan information and spit out the corresponding AV or MV for a given plan. These are set up to handle two tier benefits plans and not the typical 3 tier programs of a hospital employee benefit program with a domestic tier, PPO tier and out-of-network benefit. So a more complex plan may yet have to incur the expense of an actuary in order to substantiate the Minimum Value of the plan. HHS estimates that only 1.6% to 2% of people are covered by plans with a MV of less than 60%.

WestLake Financial Group, Inc. will be watching for further developments and will advise accordingly. If you have any questions, please feel free to contact your WestLake Financial Group, Inc., representative.